A decade on big U.S. banks are still running down and selling off crisis-era mortgages, a process executives point to as weighing on loan growth, Reuters reported. Eager to see a turning point in loan books, analysts count these portfolios as one factor, along with home equity loan runoff and new mortgage demand, to watch for when deciphering the true loan growth picture as U.S. second-quarter bank earnings start today. Wells Fargo & Co and Bank of America Corp executives have flagged portfolios from prior to the 2008-09 crisis era where banks are no longer originating similar new products when they are asked to predict a turning point in consumer loans. “These are portfolios of a bygone era that were very, very painful for the banks,” said Gerard Cassidy, bank analyst with RBC Capital Markets. “They are not plain vanilla portfolios, which means they are more costly to manage. It may just not be worth the headache.” Analysts have said higher loan growth is critical to driving bank’s stock prices, but they anticipate only a modest acceleration year over year, driven primarily by commercial and industrial loans, not residential. Bank of America at the end of 2017 had nearly $11 billion in credit-impaired mortgages left from buying Countrywide Financial, less than one-third of what it held at the end of 2009. JPMorgan Chase & Co still owns roughly $30.5 billion-worth of the $89 billion in bad loans took on from Washington Mutual in 2008.
